The U.S. Wants to Adopt a Cap-and-Trade Plan for Water That Isn’t Working

Sep 3, 2019

First Read

A Fictional Account of the Results of Supporting Open Outcry
John Lothian – John Lothian News

This is the story of open outcry trading, electronic trading and an imaginary secret organization I created to tell the story of both. This was the first time I used SPET, or the Society for the Promotion of Electronic Trading, to tell a story. Back in the early days of electronic trading, trading was only offered during night time hours. The CME would famously name its trading system Post Market Terminal, or PMT.

For the rest of the commentary, click HERE


Hits & Takes
JLN Staff

Do you remember SPET? The Society for the Promotion of Electronic Trading? Three old commentaries of mine use the imaginary advocate organization to explain issues that were happening back in the days of the battle between open outcry trading and electronic trading. Today’s commentary is the first of the three.~JJL

My podcast series is titled “This is John Lothian.” We have simplified our website to more easily find podasts and videos.~JJL

From the Japan Exchange JPX Report 2019, “As our medium- to long-term vision, JPX is aiming to evolve into a “total smart exchange,” an exchange that enables anyone to trade any product safely and easily, not only stocks and related products but also similar and peripheral fields, such as commodities.” ~JJL

The “full-stack cryptocurrency ecosystem” Bcause filed its reorganization plan late on Friday afternoon, basing its plan to emerge from voluntary bankruptcy on tightening its embrace of bitcoin by pivoting away from just providing infrastructure and services to mining bitcoins for its own account. It is also looking to establish a separately capitalized subsidiary called Bcause Secure to run a bitcoin trading operation. If successful, Bcause plans to repay creditors in full. This hearing is scheduled for Wednesday, September 4. ~Thom Thompson

The Security Traders Association (STA) is sponsoring a Rise Up for Resilience Gala on September 19 at Guastavino’s in New York City in support of Tuesday’s Children, an organization that provides healing for communities hurt by terrorism or traumatic loss. You can find more information here. ~SR


The Spread – Banking On It

Activities in big bank options market making, Boris Johnson’s surprise announcement, and James Harden’s offensive basketball acumen are all covered in this week’s episode of “The Spread.”

Watch the video »


Negative Interest Rates Threaten the Financial System; Markets may need to be rebuilt on a new set of assumptions, but we don’t know what those should be or how they would work.
Jim Bianco – Bloomberg
Former Federal Reserve Chairman Alan Greenspan recently said he wouldn’t be surprised if yields on U.S. bonds turned negative and if they do, it wouldn’t be “that big of a deal.” That seems to be a sentiment widely held in central banking circles these days, but it’s wrong. Negative interest rates represent a threat to the financial system.

*****All is well! No worries! Don’t run me over!!!~JJL


How Brexit Blew Up Britain’s Constitution; Boris Johnson is looking less like a traditional conservative and more like a revolutionary in his gambles over Brexit.
Therese Raphael – Bloomberg
After weeks of poking and jabbing, Boris Johnson finally looks close to getting the reaction from parliament he seems to have wanted all along. If lawmakers succeed in taking charge of the parliamentary time table Tuesday in order to pass legislation that would block the prime minister from pursuing a no-deal Brexit, he is expected to demand a snap election. A two-thirds majority of parliament would be required to approve a new vote.

***** “Anything to win” is the wrong strategy for the people.~JJL


Contempt and Sanctions Hearing Against the CFTC Arising From Manipulation Complaint Settlement Delayed to October 2
Gary DeWaal – Bridging the Week
The Commodity Futures Trading Commission received a short delay of the hearing date to determine if it should be subject to a contempt determination, sanctions and other relief for publishing a press release, a formal statement, and a statement by two commissioners contemporaneously with its August 15 publication of the consent order of settlement resolving an enforcement proceeding brought by it against Kraft Foods Group, Inc. and Mondelez Global LLC.


Friday’s Top Three
Welcome back. Our top story of the day on Friday was the FT’s Rise of MarketAxess mirrors demise of traders on Wall Street. Second was the DRW college campus schedule. Third was a prior top 3, Hedge fund CEO arrested at her Rittenhouse Square condo, charged in $63 million Ponzi scheme from the Philadelphia Inquirer.


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Lead Stories

The U.S. Wants to Adopt a Cap-and-Trade Plan for Water That Isn’t Working; In Australia, dead kangaroos and a scandal called Watergate are results of flawed plan for water market
Rachel Pannett | Photographs by Annika Kafcaloudis – WSJ
Australia’s Darling River was once filled with fleets of paddle steamers carrying wool to ships bound for England. For nearly two centuries, it provided fresh water to farmers seeking to tame Australia’s rugged interior.

Brokers, Hedgers Among Pioneers in Japan Power Futures Debut
Aya Takada and Stephen Stapczynski – Bloomberg
Two foreign companies to join Tocom power market as members; Tocom president expects incumbent utilities to join later
More than 30 companies will be eligible to start futures trading in one of the world’s biggest power markets when the Tokyo Commodity Exchange debuts Japan electricity contracts this month, including at least two foreign firms.

U.S. Stock Market Wars Pit Everyone Against Everyone Else
Lananh Nguyen – Bloomberg
Exchanges, regulator lock horns over study testing broker fees; Dispute turns nasty as SEC pilot program gets held up in court
It’s an arcane, technical part of stock-trading, part of the hidden plumbing behind every click to buy or sell. But for those who run, regulate and trade in U.S. equity markets, it’s become a battlefield. At issue are rebates — the payments that exchanges make to top traders and brokers for sending them their business. The point of contention is a two-year government pilot program — a Securities and Exchange Commission experiment — designed to determine whether rebates influence the locations where trades are made.

Cboe readies Amsterdam hub despite Brexit uncertainty; Trading venue will allow investors across the EU to trade shares of companies based in the bloc
Philip Stafford – Ft
Cboe Europe is to set to open an Amsterdam hub that will allow investors across the EU to trade shares of companies based in the bloc, whether or not Brexit happens as planned at the end of October.

Big Bank Headcounts Aren’t Budging Despite Dramatic Job Cuts
Yalman Onaran – Bloomberg
BofA, Wells Fargo, HSBC are among companies adding employees; Stock underperformance helped spur efforts to rein in expenses
Pockets of job growth are offsetting some of the dramatic cuts at the world’s largest lenders. Bank of America Corp., Wells Fargo & Co., HSBC Holdings Plc and Credit Suisse Group AG added some 12,000 jobs in the first half of the year, according to data compiled by Bloomberg, meaning aggregate staff levels at 16 of the largest U.S. and European lenders haven’t budged even amid the high-profile slashing.

Deregulating Financial Markets Was ‘Stupidity,’ Says Schaeuble
Arne Delfs – Bloomberg
Known for his resolute fiscal discipline during the euro crisis, Wolfgang Schaeuble made an unusual plea to tame market forces, saying that deregulation before the financial crisis was a “stupidity.”

Why brokerage accounts are becoming more popular
Andrea Coombes – MarketWatch
When you’re not quite sure where life might take you — or what you’ll need your money to do for you — you want flexibility. That might be one reason why more Americans are turning to the old-school brokerage account.

Low interest rates could be a “Blockbuster Video moment” for the world’s biggest banks
John Detrixhe – Quartz
David Ellison, a portfolio manager who specializes in bank stocks, started his investing career 36 years ago, around the time that Blockbuster Video was founded. One of his biggest worries is that America’s lenders will go the way of the erstwhile movie rental company that failed to keep up with technology.

Financiers press for tax cuts and lighter City regulation; Sajid Javid meets leading bank and insurance executives for first time
Patrick Jenkins and Daniel Thomas – FT
Tax cuts for banks and lighter regulation of the City of London are essential if the financial services sector is to thrive post-Brexit, top financiers told Sajid Javid in their debut meeting with the chancellor on Monday.

HKEX to Launch Indian Rupee Currency Futures
Hong Kong Exchanges and Clearing Limited (HKEX) is pleased to announce it will launch Indian Rupee (INR) Currency Futures in the fourth quarter of this year. These new contracts will further expand HKEX’s suite of derivatives products, providing additional risk management opportunities for customers worldwide.

Mizuho Securities becomes first Japanese clearing member at LCH SA; Mizuho Securities is the first Japanese member to clear Euro debt at French operating LCH SA.
Hayley McDowell – The Trade
Mizuho Securities has joined the London Stock Exchange Group’s French operating clearinghouse LCH SA as the first Japanese clearing member.

A Natural Gas Glut Grows in Europe and Prices Hit 10-Year Low
Vanessa Dezem, Mathew Carr, and Anna Shiryaevskaya – Bloomberg
Storage sites near full with weeks before heating season start; Traders expect producers won’t scrimp on delivering more gas
Natural gas prices in Europe are set to fall further below their lowest in a decade as suppliers show few signs of scaling back abundant deliveries.

A Crypto Fix for a Broken International Monetary System
Michael J Casey – Coindesk
The international monetary system is broken. Helping to fix it poses a huge opportunity for the cryptographers behind cryptocurrency and blockchain technology. Now they have one of the stewards of that system in their corner: Mark Carney, the outgoing Bank of England Governor.

Big banks lean on eight elite universities for new recruits; An investigation into the educational backgrounds of 600 investment banking trainees shows continued elitism
By Paul Clarke – Financial News
More than half of trainees hired by London’s biggest investment banks come from just eight of the UK’s top universities, according to exclusive analysis by Financial News, reigniting concerns of elitism.

Advisory firm suggests US Congress to regulate crypto sector under the Bank Secrecy Act
The Block Crypto
Financial Integrity Network (FIN), a strategic advisory firm, has recommended U.S. Congress to create a new class of financial institution under the Bank Secrecy Act (BSA) to regulate firms in the cryptocurrency sector.

A German Tax Case Is Putting the Entire Finance Industry on Trial
By Karin Matussek – Bloomberg
First trial over controversial Cum-Ex deals starts Sept. 4; Roles of banks, brokers, funds, investors to be exposed
Germany’s most convoluted tax case in recent memory gets a human face this week when two former investment bankers make their debut in court. But more than the duo’s dealings, it’s the role of the financial services industry at large that will come under scrutiny.

Exchanges, OTC and Clearing

Speech by Loh Boon Chye, CEO, Singapore Exchange at Euromoney’s The Global Borrowers and Investors Forum – Asia on 3 September 2019
We are gathered here at an interesting time for the bond markets. Ongoing global trade tensions continue to pose risks to the world economy. However, even as global growth moderates, bond markets in emerging Asia are expanding. This is underpinned by the expectation that emerging Asia will remain one of the fastest growing regions in the world, leading global growth amid historically low interest rates.

JPX Report 2019
We are glad to inform you of the publication of the JPX Report 2019. Prepared as part of our efforts toward integrated reporting, the report offers stakeholders and the general public a deeper insight into our corporate philosophy, social role, and our initiatives toward value creation.

Passing of an Independent Non-Executive Director
The board of directors (“Board”) of Hong Kong Exchanges and Clearing Limited (“HKEX”)
announces with deepest sorrow that Ms Ma Xuezheng, Mary, an independent non-executive
director of HKEX and a member of the Audit Committee, the Risk Committee and the Risk
Management Committee (statutory) of HKEX, passed away on 31 August 2019.

LCH SA welcomes Mizuho as its first Japanese clearing member
Mizuho Securities Co., Ltd live clearing Euro debt at LCH SA; Demonstrates international appeal of LCH’s clearing offering, representing the largest European pool of cleared debt;
LCH, a leading global clearing house, today announced that Mizuho Securities Co., Ltd (Mizuho) has become the first Japanese financial institution to access LCH SA’s Euro debt clearing services as a member of RepoClear. By joining the service, Mizuho is now able to access the largest netting pool of Euro-denominated debt, allowing it to benefit from the risk management and operational efficiencies of central clearing.

Cash markets will turnover 130.2 billion euros in August
Deutsche Börse
Deutsche Börse’s cash markets generated sales of EUR 130.2 billion in August (previous year: EUR 130.0 billion). Of this, EUR 117.4bn was attributable to Xetra (previous year: EUR 117.9bn), bringing the average Xetra daily turnover to EUR 5.3bn (previous year: EUR 5.1bn). EUR 3.0 billion was transacted at the Frankfurt Stock Exchange (previous year: EUR 3.2 billion) and EUR 9.8 billion at the Tradegate Exchange (previous year: EUR 8.8 billion).

Eurex Exchange Readiness Newsflash | Eurex Exchange’s T7 Release 8.0 – Publication of documentation
Dear Eurex Participant, With this Newsflash we would like to highlight the system documentation for T7 Release 8.0 available on the Eurex website

Eurex incentivizes Eurex Enlight with temporary fee waiver
To foster transparency and to improve efficiency around the negotiation of off-book transactions, Eurex has introduced a fee waiver for its fully integrated RFQ platform Eurex EnLight which will be effective until 31 December 2019. The temporary fee waiver will apply to Requesters for Eurex EnLight trades. For more details read Eurex Circular 081/19.

Nasdaq Nordic And Baltic Markets Trading Statistics August 2019
Nasdaq (Nasdaq:NDAQ) today publishes monthly trade statistics for the Nordic1 and Baltic2 markets. Below follows a summary of the statistics for August 2019:

SIX Trading Key Figures: August 2019
In August, trading turnover on the Swiss stock exchange was down -5.0% on the previous month and reached CHF 131.2 billion. There was also a decrease in the number of transactions by -2.9% to 6,667,523. In comparison with the corresponding period last year, trading turnover was up by 4.6% at CHF 962.6 billion, while the number of trades dropped by -0.5% to 40,139,857. Since the beginning of the year, the SMI® rose by 17.4% and reached 9895.7 points at the end of August.

US Largest Futures Market CME Records All-Time High Bitcoin Trading
Coin Idol CME is registering some of its highest 24-hour trading volumes since its official launch.
Bitcoin futures trading on the world’s leading options and futures contracts open interest exchange of any futures exchange Chicago Mercantile Exchange (CME), a global markets company, has more than doubled in 2019. CME is registering some of its highest 24-hour trading volumes since its official launch.

Zhengzhou commodity exchange to beef up overseas cooperation
By Song Lin – Global Times
China’s Zhengzhou Commodity Exchange (ZCE) signed a memorandum of understanding (MOU) on Sunday with Russia’s Moscow Exchange, which is one of the world’s leading comprehensive exchanges and a backbone of the capital market in Europe and the world.


Aberdeen Standard Investments overhauls desktops with IGEL; Aberdeen Asset Management has been working with IGEL for four years to deploy the IGEL operating system, prior to its merger with Standard Life.
Hayley McDowell – The Trade
Aberdeen Standard Investments has standardised thousands of its virtual desktops by implementing an operating system for cloud workspaces from software provider IGEL in a multi-year partnership.

Goldman Ready to Invest More in German Fintechs
Stephan Kahl – Bloomberg
Deals won’t be limited to Berlin, Goldman partner Yared says; Fintech industry is seeing record funding and wave of failures
Goldman Sachs Group Inc. is preparing to invest in more German financial startups at a time when the industry is seeing a record inflow of money as well as a wave of failures.

CloudMargin Names Karl Wyborn Global Head of Business Development
CloudMargin, creator of the world’s first and only collateral and margin management solution native to the cloud, today announced the appointment of Karl Wyborn to the new role of Global Head of Business Development, effective immediately. Wyborn, a Managing Director and 24-year veteran of financial services with numerous senior roles in collateral management, has served as CloudMargin’s Global Head of Sales for nearly four years. He will continue to report to Stuart Connolly, CloudMargin CEO, based in the London headquarters.

In Zimbabwe, Promise of Mobile Money Fades When the Power Goes Out; Ecocash, the cellphone platform used for eight out of 10 financial transactions, regularly breaks down
By Bernard Mpofu and Gabriele Steinhauser – WSJ
With the crowd behind him getting restless, Silas Hwamiridza frantically punched his cellphone’s keys, trying to make a payment for gas at his local station.


Dutch central bank to regulate crypto firms from January 10, orders them to register
The Dutch central bank announced on Tuesday it would begin regulating companies that offer crypto-currency services beginning on Jan. 10 and said they must register to remain in business.

Van Eck, SolidX to Offer Limited Version of Bitcoin Exchange-Traded Fund; Crypto enthusiasts have been trying with little success to get regulatory approval for bitcoin funds
Paul Vigna – WSJ
Crypto enthusiasts have been trying without much success to get regulatory approval for funds to bring bitcoin to investors. Two firms plan to use a workaround.

ECB’s Mersch Says Siren of Libra Is Beguiling But Treacherous
Piotr Skolimowski – Bloomberg
Facebook’s Libra attracts increased scrutiny from regulators; Executive Board member says only central bank money is viable
The European Central Bank’s key legal official Yves Mersch described Facebook Inc.’s plan for its Libra digital currency as “beguiling but treacherous,” in a defense of money issued by institutions such as his.

Binance Acquires Crypto Exchange JEX to Boost Derivatives Offerings
Daniel Palmer – Coindesk
Binance has announced the acquisition of crypto exchange JEX in a bid to boost its crypto derivatives offerings for pro traders.

Thai Cryptocurrency Exchange Bitcoin Co. Ltd. Closing Down Operations
Joeri Cant – Cointelegraph
Thailand’s leading cryptocurrency exchange Bitcoin Co. Ltd. ( is closing down all of its trading operations.
The exchange announced its decision to discontinue trading on Sept. 2.

Bitcoin’s Total Share of Crypto Market Now Highest Since March 2017
Omkar Godbole – Coindesk
Bitcoin (BTC) is flashing green at press time, while its share of the cryptocurrency market has reached at 30-month highs above 70 percent.

European Central Bank bigwig outlines why Facebook’s Libra isn’t real cryptocurrency
David Canellis – The Next Web
A representative of the European Central Bank (ECB) has slammed Facebook’s quasi-cryptocurrency Libra, referring to its proposed ecosystem as a “siren call.”
Yves Mersch, Luxemborgian lawyer and ECB executive board member, even told attendees of the European System of Central Banks’ legal conference the Libra ecosystem will be “cartel-like.”

Bitcoin Mining Farms Are Flourishing on the Ruins of Soviet Industry in Siberia
Anna Baydakova – Coindesk
Built during the Cold War to power Soviet manufacturing, the Bratsk hydroelectric station in Eastern Siberia is now fueling another energy-hungry industry: bitcoin mining.

HSBC Targets China Trade With Yuan-Demoninated Blockchain Letter of Credit
Daniel Palmer – Coindesk
HSBC has carried out the first blockchain-based letter of credit transaction denominated in Chinese yuan.

Liquid Exchange Reveals Escrow Account for Sale of Telegram Tokens
Anna Baydakova – Coindesk
Liquid, a Japan-based cryptocurrency exchange that ran a sale of Telegram’s yet-to-be-minted crypto tokens in July, has disclosed the wallet address where the funds will rest until the tokens are released.

Binance Launches Two Crypto Futures Platforms for User Testing
Daniel Palmer – Coindesk
Cryptocurrency exchange Binance has launched not one, but two test platforms for its planned crypto futures products.


Why Trump’s constant attacks on an independent press are so dangerous
Brian Stelter, CNN Business
One of the most consistent features of the chaotic Trump presidency are the attacks against the press. President Donald Trump and his allies tell the public almost daily not to believe real reporting. But the frequency and predictability of the attacks don’t make them any less damaging. To the contrary: The falsehood-filled tweets and televised tirades are gradually eroding Americans’ shared sense of reality.

China’s Xi says country facing a period of ‘concentrated risks’
China is entering a period where it faces “concentrated risks” – economically, politically and diplomatically – and the country must be able to fight and win against those who challenge China’s bottom lines, President Xi Jinping said on Tuesday.

China Softens Tone on Hong Kong, But Doesn’t Yield on Demands
Bloomberg News
Officials draw line between peaceful protesters and ‘rioters’; Beijing reaffirms opposition to call for direct democracy
China softened its tone toward Hong Kong’s protesters, saying peaceful demonstrations were allowed under the law, even as it ruled out a fundamental demand for direct democracy that has fueled the unrest.

There will be election manipulation in 2020. Scientists can’t stop it, but they can study it
Olivia Goldhill – Quartz
There’s no doubt Russian influence spread misinformation in the 2016 election. Plenty of questions remain though: Did Russian efforts successfully change election results? How can we know if election interference happens again? And, perhaps most importantly, how can we identify it early enough to stop it?

Trump Trade War With China Will Hit Apple for Real This Weekend
By Mark Gurman
Tariff of 15% coming to AirPods, Watch, headphones on Sunday; U.S. levies on iPhones aren’t scheduled to hit until December
The trade war between the U.S. and China will hit Apple Inc. this weekend, dragging the largest U.S. technology company into a fracas that threatens to raise prices on popular consumer gadgets and undermine a giant but delicate global supply chain.

Boris Johnson’s Move: Maybe Constitutional, Definitely Not Democratic; Direct democracy isn’t more valid than representative democracy.
By Noah Feldman – Bloomberg
Critics of Boris Johnson’s decision to “prorogue” Parliament by sending its members home for several weeks say it is undemocratic: the Prime Minister is making it much harder for Parliament to influence Brexit, and thus making it more likely that the UK will leave the EU without a deal. Johnson’s supporters, however, maintain that there is nothing undemocratic about it, since it helps execute the will of the people as expressed in the 2016 referendum.

The Hard Part of Ending Inequality Is Paying for It; Executives and lawmakers agree on the problem. Coming up with the money will be a challenge.
By Nir Kaissar – Bloomberg
Buried among the storylines about global trade and political intrigue from the G7 summit last month is perhaps the most noteworthy one of all. Business for Inclusive Growth, or B4IG, a coalition of 34 multinational companies with more than 3 million employees and revenues topping $1 trillion, unveiled an initiative to tackle inequality with help from the Organization for Economic Cooperation and Development.


How to engage with regulators – Opening remarks
Opening remarks by John Price, Commissioner, Australian Securities and Investments Commission at the Governance Institute of Australia National Conference 2019, (Sydney, Australia) 2 September 2019
Thanks for that introduction and for the opportunity to make some brief opening comments on engaging with regulators.

ASIC’s approach to enforcement after the Royal Commission
A speech by ASIC Commissioner Sean Hughes at ‘Banking in the Spotlight’: the 36th Annual Conference of the Banking and Financial Services Law Association, Gold Coast, Queensland, 30 August 2019

ESMA Strengthens Liquidity Stress Tests for Investment Funds
The European Securities and Markets Authority (ESMA) has published today its final guidance regarding liquidity stress tests of investment funds – applicable to both Alternative Investment Funds (AIFs) and Undertakings for the Collective Investment in Transferable Securities (UCITS).

‘Built on a Lie’ Mutual Funds Headed for Tougher Rules in U.K.
Silla Brush – Bloomberg
The Bank of England is laying the groundwork for tougher restrictions on the mutual fund industry after crises at funds run by Neil Woodford and H2O Asset Management exposed the mismatch between investing in hard-to-sell assets and offering investors easy withdrawals.

Investing and Trading

Investors pile into gold as trade conflict rumbles on; Holdings of the yellow metal are at their highest level since 2013
Henry Sanderson – FT
Holdings in gold-backed exchange traded funds surged to their highest levels in six years last month, as investors ploughed almost $5bn into the precious metal as part of a so-called “fear trade” responding to mounting political risks.

Why central bankers may be hurting rather than helping lenders; Cutting rates below zero distorts the market for banks and for investors
Huw van Steenis – FT
As central bankers weigh up cutting interest rates deeper into negative territory, investors should consider when the risks of this trend will begin to outweigh its benefits.

Rich people are hoarding cash, and wealth managers are getting frustrated; Some wealth managers are genuinely frustrated that clients think cash is the safest bet in a world of negative interest rates
Alice Ross – FT
A friend of mine has relatives in Germany who converted some of their not insubstantial family wealth into gold bars and buried them in the woods of Bavaria. This was at a time before negative interest rates so was not a reaction to today’s uncertain global economy, rather mistrust of the financial system in general. Yet it highlights a propensity on the part of the wealthy to hoard that is increasingly frustrating wealth managers.

‘Oil & Money’ Conference Rebrands For More Climate-Minded Times
Grant Smith – Bloomberg
After 40 years, event is renamed ‘Energy Intelligence Forum’; New mission will include focus on finding low-carbon solutions
For four decades, the “Oil & Money” conference has been one of the crude sector’s biggest fixtures, bringing together executives, government ministers and journalists for a few days of discussion about the industry in London.

Corporate Executives Are Buying Stocks. Do They Know Better?
Michael Msika – Bloomberg
When equity markets tumbled in August, one group of investors showed unshakable confidence: company insiders. So much that the buy-to-sell ratio of corporate executives in Europe reached its highest level since December, according to data compiled by 2iQ Research.

Why One Of The Oldest Investing Strategies Has Been Doing Terribly
Tracy Alloway and Joe Weisenthal – Bloomberg
One of the oldest, most basic strategies in investing is value investing, which, for lack of a better way to put it, means “buy stocks that are cheap.” Value investing, a style associated with Warren Buffett, systematically attempts to uncover low-priced stocks. But by many measures, value investing hasn’t been working recently, as high-priced growth stocks (think: technology) have trounced cheap stocks. On this week’s episode, we speak with Chris Meredith, Co-CIO of O’Shaughnessy Asset Management about what’s behind this underperformance, and why that may be coming to an end.

The Market Forces That Propelled a Massive Rally in Long Bonds; Recession signals flashed by the bond market may have been exaggerated
By Paul J. Davies – WSJ
Long-term bonds have been on a tear in recent weeks with yields tumbling enough to heighten fears of a possible recession ahead.


JP Morgan EMEA equity sales head departs after almost a decade; Michael Wilson confirms his departure from JP Morgan, while Ludovic Peiron and Scott Mitchell are named co-heads of global equity derivatives sales and marketing.
Hayley McDowell – The Trade
The head of equity sales for Europe, the Middle East and Africa at JP Morgan, Michael Wilson, is set to depart the investment after almost a decade.

Columbia Threadneedle EMEA investment chief to step down; Global head of equities, William Davies, will replace Mark Burgess as EMEA CIO at Columbia Threadneedle later this month.
Hayley McDowell – The Trade
Columbia Threadneedle Investments has confirmed that its chief investment officer for Europe, the Middle East and Africa, Mark Burgess, will step down after nine years to take a break from his career.

Deutsche chief Christian Sewing to spend 15% of salary on bank’s shares; Pledge to put ‘money where my mouth is’ comes as push to revive lender faces growing challenges
Martin Arnold – FT
Deutsche Bank chief executive Christian Sewing is backing his plan to turn round the lender’s ailing share price by committing to spend 15 per cent of his net salary on its stock.

Woodford loses ally on board of namesake investment trust; Steven Harris to step down from Woodford Patient Capital in latest shake-up
Owen Walker – FT
UK stock picker Neil Woodford has lost a longstanding ally at the investment trust that bears his name, after Woodford Patient Capital Trust announced a further shake-up of its board.


China acts on ‘major political task’ of high pork prices; African swine fever results in 25% rise in cost of the meat in just one month
Tom Hancock – FT
Spiralling pork prices caused by African swine fever threaten to undermine the image of China’s ruling Communist party and economic stability, a top official has said, as one city began selling rations of the meat at discounted prices.

Australia’s 15 projects aim to break China rare earths dominance; Canberra and Washington step up co-operation on vital minerals underpinning high-tech sector
Jamie Smyth – FT
Canberra has identified 15 rare earth and critical mineral projects it aims to champion as part of joint Australia-US efforts to challenge China’s dominance in the supply of materials commonly used in the defence and high-tech industries.

Why Polish Banks Face a Reckoning Over Franc Loans
Maciej Martewicz – Bloomberg
It was too good a deal to pass up. Starting more than a decade ago, Poles got the chance to take out mortgages denominated in Swiss francs with interest rates less than half the prevailing level for loans in Polish zloty. More than a million people jumped at the opportunity. Then in 2015, the Swiss unpegged the franc from the euro and it surged in value, just as the zloty was weakening. Some loans doubled in zloty terms, leaving homeowners struggling to pay. Thousands sued, and a European court ruling expected this year could afford them relief. The impact on Polish banks could be severe, wiping out the equivalent of four years of profits.

China’s Most Indebted Firm Is Too Big to Fail; This property developer is borrowing even more to expand into unlikely projects, such as electric vehicles. But there’s a method to the madness.
Nisha Gopalan – Bloomberg
There’s a lot working against China’s most indebted property firm. China Evergrande Group is sitting on $113.7 billion in debt and its core profit fell 45% in the first half of the year. Real-estate growth is slowing, with banks under orders to curb home loans. President Xi Jinping’s refrain that houses are for living in, not speculation, has been cropping up more frequently.

Japan Companies Are Sitting on Record $4.8 Trillion in Cash
Ishika Mookerjee, Fox Hu, and Min Jeong Lee – Bloomberg
Firms pay out 40% of profits; they could afford 70%: Jefferies; Cash levels are increasing even as buybacks, dividends rise
In banks across Japan sits a pile of money that’s bigger than most countries’ gross domestic product — the cash reserves of the nation’s companies. For some it’s a testament to their strength, but to many it’s a wasted opportunity.

China gives full onshore debt access to Deutsche Bank and BNP; Decision marks country’s latest effort to open its financial sector as trade war bites
Hudson Lockett – FT
Deutsche Bank and BNP Paribas have become the first foreign banks to gain Beijing’s approval to lead underwriting for all kinds of onshore debt in China — the latest high-profile reform this year aimed at opening the financial sector of the world’s second-largest economy.


Boris Johnson threatens to call October 14 election; UK prime minister issues ultimatum over rebel vote in parliament on Brexit
George Parker and James Blitz – FT
Boris Johnson has raised the stakes over Brexit by threatening to call an October 14 general election if rebel Tory MPs join forces with Labour on Tuesday to “chop the legs out” from under his negotiating strategy.

How MPs aim to stop a no-deal Brexit on October 31; Rebel Tories and opposition parties seek control of Commons agenda to pass a law
James Blitz, George Parker and Jim Pickard in London – FT
Rebel Conservative MPs are set to join forces with opposition parties on Tuesday to try to push legislation through the UK parliament that would aim to stop a no-deal Brexit on October 31.

Johnson Called Parliament a ‘Rigmarole’ in Handwritten Note
Alastair Reed and Jonathan Browning – Bloomberg
Johnson’s handwritten comment read out in prorogation hearing; Judge in Edinburgh allows Scottish government to intervene
A key legal test of Boris Johnson’s plan to suspend Parliament got underway in Edinburgh, with an attorney for a group of lawmakers saying that the prime minister’s move shows a “breathtaking” contempt for the U.K.’s constitution.

EU Nationals Can’t Trust Brexiters on Migration; Insults, humiliation, kafkaesque bureaucracy and the U.K.’s history are all red flags.
Lionel Laurent – Bloomberg
As crowds gathered last week to protest U.K. Prime Minister Boris Johnson’s decision to suspend Parliament ahead of Brexit, a distraught woman pushed her way in front of the cameras to voice her fears of being kicked out of the country.

Brits Count Cost as U.K.’s Brexit Pain Deepens
Flavia Krause-Jackson – Bloomberg
Britons woke up this morning to their cup of tea and news the pound had dropped to its lowest level since 2017 in response to the latest Brexit drama.

Goldman Sachs raises ‘no deal’ Brexit chances as general election looms
Goldman Sachs has raised its estimate for the likelihood Britain will crash out of the European Union without a deal to 25% from 20% citing the prolonged suspension of Parliament, as lawmakers decide the fate of the government’s Brexit plans.

Brussels baffled by Boris Johnson’s Brexit progress claims; PM says deal outline is nearly ready but EU says no backstop alternatives have been tabled
Daniel Boffey and Jennifer Rankin – The Guardian
Brussels has responded with bafflement at Boris Johnson’s claims of progress in the Brexit talks, with EU officials warning that discussions are going nowhere.

Don’t buy the bluff. Here’s the truth about no-deal Brexit
Anand Menon – The Guardian
No-deal Brexit has never loomed larger than in the current moment. Boris Johnson has said that Britain will leave the European Union on 31 October. His entire political strategy is based on the credibility of his threat to follow through, regardless of whether he has come to an agreement with the remaining 27 members. As a result, the need to understand what no deal may mean in practice has become increasingly urgent.

Brexit: Boris Johnson’s government ‘lying to public’ about state of EU negotiations; Dominic Cummings described talks as a ‘sham’ leak claims
Jon Stone – Independent
The British government has been accused of lying to the public back at home about the state of progress in Brexit negotiations in Brussels.


Mobile Sports Betting Is the Moneymaker as More States Legalize; Some states that disallow mobile wagers, like Mississippi, have brought in less tax revenue than expected from sports gambling
Katherine Sayre – WSJ
Bets placed via smartphones have rapidly brought New Jersey neck-and-neck with Nevada in the race to be the nation’s biggest sports-betting market. Limits in other states, though, could hamper the nascent industry’s growth.

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